The Break-Even Calculator tells you exactly what win rate you need to be profitable based on your risk/reward ratio. This is critical for validating your trading strategy.

What You'll Need

Your average risk/reward ratio
OR your typical win size and loss size

Step-by-Step Instructions

1Enter Risk/Reward Ratio

What's your typical R:R ratio?

Common Ratios:
• 1:1 - Risk $100 to make $100
• 1:2 - Risk $100 to make $200
• 1:3 - Risk $100 to make $300

2Review Break-Even Win Rate

The calculator shows what win rate you need to break even (0% profit/loss).

Example:
R:R Ratio: 1:2
Break-Even Win Rate: 33.33%

This means you only need to win 1 out of 3 trades to break even!

3Compare to Your Actual Win Rate

Calculate your actual win rate from your trading journal:

Win Rate = (Winning Trades ÷ Total Trades) × 100

Example:
You took 50 trades, won 25 of them
Win Rate = (25 ÷ 50) × 100 = 50%

Break-Even: 33.33%
Your Rate: 50%
✅ You're profitable! (50% > 33.33%)

Understanding Break-Even Rates

Break-Even Table by R:R Ratio

Risk:Reward	Break-Even Win Rate	Meaning
1:1	50%	Must win half your trades
1:1.5	40%	4 out of 10 trades
1:2	33.33%	1 out of 3 trades
1:3	25%	1 out of 4 trades
1:4	20%	1 out of 5 trades
1:5	16.67%	1 out of 6 trades

💡 Key Insight: Better R:R ratios require LOWER win rates to be profitable. This is why risk management matters more than winning percentage!

Real Strategy Examples

Strategy 1: Scalping (Poor R:R)

Average Win: $50
Average Loss: $100
R:R Ratio: 1:0.5 (terrible - risking $100 to make $50)

Break-Even Win Rate: 66.67%

You need to win 2 out of every 3 trades just to break even. Very difficult!
Verdict: ❌ Unsustainable strategy

Strategy 2: Swing Trading (Good R:R)

Average Win: $300
Average Loss: $100
R:R Ratio: 1:3

Break-Even Win Rate: 25%

You only need to win 1 out of 4 trades to break even.
If you win 40% of trades, you're very profitable!
Verdict: ✅ Excellent strategy

Strategy 3: Balanced Approach

Average Win: $200
Average Loss: $100
R:R Ratio: 1:2

Break-Even Win Rate: 33.33%

With 50% win rate (common for support/resistance strategies):
• 50 trades: 25 wins × $200 = $5,000
• 50 trades: 25 losses × $100 = -$2,500
• Net Profit: $2,500 ✅

The Math Behind It

Break-Even Formula:

Break-Even % = 100 ÷ (1 + Reward/Risk Ratio)

Example Calculation:
R:R Ratio = 1:2 (Risk $1 to make $2)
Reward/Risk = 2

Break-Even % = 100 ÷ (1 + 2) = 100 ÷ 3 = 33.33%

How to Use This for Strategy Evaluation

Step 1: Track Your Last 20-50 Trades

Calculate your actual win rate and average R:R ratio.

Step 2: Use Break-Even Calculator

Enter your R:R ratio to see required win rate.

Step 3: Compare

Actual Win Rate > Break-Even Rate = Profitable strategy ✅
Actual Win Rate = Break-Even Rate = No profit, no loss
Actual Win Rate < Break-Even Rate = Losing strategy ❌

Common Mistakes

❌ Mistake #1: Focusing Only on Win Rate

80% win rate sounds great, but if your wins are $10 and losses are $100, you're broke. R:R matters MORE than win rate.

❌ Mistake #2: Cherry-Picking Trades for Calculation

Use ALL trades from a representative period. Don't exclude "bad days" or "outliers."

❌ Mistake #3: Not Accounting for Commissions

Broker fees reduce your actual R:R. If you think you're getting 1:2, fees might make it 1:1.7.

❌ Mistake #4: Ignoring Statistical Significance

50 trades minimum for reliable data. 10 trades isn't enough to evaluate a strategy.

Pro Tips

💡 Tip #1: If your actual win rate is below break-even, don't just trade more. Fix your R:R by tightening stops or extending targets.

💡 Tip #2: Calculate break-even rate monthly. If your R:R changes (you improve), your required win rate drops.

💡 Tip #3: Aim for actual win rate = break-even + 10-15%. This gives you a cushion for variance and ensures consistent profit.

💡 Tip #4: Use this with the Income Projection Calculator. Once you know you're above break-even, project monthly income.

FAQ

Q: What's a good break-even rate?

A: Lower is better! 33% (1:2 R:R) or less means your strategy has a high margin of safety.

Q: My win rate exactly matches break-even. Am I profitable?

A: No, you're at zero profit. Commissions, spreads, and slippage will put you in the red. Improve your R:R or win rate.

Q: Can I have too low a break-even rate?

A: Theoretically no, but 1:5+ R:R ratios are rare in real trading. Don't set unrealistic targets just to lower break-even.

Q: How often should I recalculate?

A: Monthly. Your strategy evolves, market conditions change, and your R:R may improve with experience.

Open Break-Even Calculator →